Should I form a LLC for House Hacking?

Question

I am in the middle of purchasing a duplex in order to house hack. Should I set up a LLC to collect the rent payments? or should I just collect them in my name?

Will the LLC give me any tax benefits or anything?

I plan on purchasing more rental properties in the future. Probably in the next 1-2 years. Would it be easiest to just set up the LLC now?

Basit Siddiqi · Answer

@Nick HudspethYou likely want to consult with an attorney to best determine if an LLC is right for you.My concern would be is that a house-hack is partially a personal residence. LLC's are normally used to hold business assets/business income streams - How does having a personal asset inside of an LLC effect your asset protection.Regarding tax benefits, you are entitled to deductions with or without an LLC.

Andrew Powers · Answer

I agree with the above. You don't need an LLC, it doesn't make things any easier. Main thing to consider is if you have personal assets (including the house) that could be targeted in a lawsuit. But since it's a house hack, you have better control over how your roommates/ tenants use the property as you live at the property.

Also consider if you have the house under your name and you move out in the future, your sphere of influence decreases which inherently increases potential of liability.

Sheldon Zimmerman · Answer

Congrats Nick on a house hack. Very smart first move. So if you are using an FHA or low money down loan to buy the home. Then you will not be able to have the home in a LLC instead of your name. So since you can't buy it in an LLC. I don't see any benefit in you collecting the rents in an LLC. Now I would set up a separate account so that you keep the funds separate to keep track of everything. But I don't think setting up an LLC if the property is in your name. But I am not a legal professional so you will need to talk to a local lawyer. And I don't know what area you are referring to so your local laws or states might vary from where I am located. Best of luck and congrats.

Should I form a LLC for House Hacking?

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